U.S. Internet down by law, not market

U.S. Internet down by law, not market

Summary: The "absence of government interference in the market" so beloved of the monopolist is, in fact, interference on the monopolist's behalf. It's a choice we have made, to run our Internet market this way. And we can make another choice.


Ofcom slide on the UK entertainment market, from the BCCMarkets evolve naturally toward monopolies or shared monopolies.

This is like the "climax state" in an ecosystem.

(To the right, an analysis of the UK entertainment market from Ofcom, for the BBC.)

Antitrust law acts like a forest fire in such an ecosystem. It turns a peat bog back into a swamp. It lets the redwood spread its seed, and creates new competition.

It was to guarantee competition that the U.S. passed the 1996 Telecommunications Act, and many other countries, like the U.K., followed suit, separating the ownership of infrastructure from control of the customer.

During this decade the U.S. has reversed course. Only the phone company can provide you broadband over "its" lines. Same with the cable operator.

The result is a duopoly. You don't have choices. You pay $40-50/month. And the most efficient way to raising profits for the providers is by limiting your access to bits.

The incumbents even have the lobbying muscle to restrict competing technologies, such as wireless. Our electromagnetic spectrum has been sold to the same monopolies who control our broadband, and they are fighting every attempt to create competition.

Contrast this with the U.K., which has not allowed this climax state to come about (so far).

There has been consolidation, but the market has 5 major players, and several minor ones. Consumers there pay the equivalent of just $20/month for broadband, and can choose to get it through a mobile phone carrier "dongle."

ISPs are free to set terms and conditions of service, but if those terms become onorous the consumer can simply change carriers. The incentives are in favor of better service and faster speeds.

The point is that the "absence of government interference in the market" so beloved of the monopolist is, in fact, interference on the monopolist's behalf.

It's a choice we have made, to run our Internet market this way. And we can make another choice.

The U.S. Internet market needs the equivalent of a forest fire. We, the people have the power to start one.

Topics: Broadband, Networking, Telcos

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  • Please refrain from the BS, Dana

    [i]ISPs are free to set terms and conditions of service, but if those terms become onorous the consumer can simply change carriers[/i]

    And we cannot?

    If I do not like Comcast I can move to Verizon, Cavalier, AOL, ATX, the list goes on.

    But you (purposelly?) call out that the the UK carries are all separate, then group Verizon, Cavalier, AOL, ATX as all one entity calling them collectivelly "THE phone monolpoly", as in that they are all one company.

    If I'm incorrect, let me know, but that is how your articles read anymore when talking about this subject.

    That is BS writing
    • There is very little competition in the U.S. market

      When phone and cable monopolists are allowed to require that all competitors own all their own infrastructure, that is a barrier to entry which destroys competition.

      What you have described is not competition. You have a choice between two "facilities based" monopolists and dial-up.

      We pay twice as much for service as people in England, and the service isn't as good. That's not B.S. It's the arguments of the monopolists defending the practice that are B.S.
    • RE: PLease Refrain from the BS

      You, Sir, are [b]hip deep[/b] in the [i]B---S---[/i].

      Country wide, the "appearance" of competition is deceiving!!! In many areas, your choices are [b]BIG Cableco[/b] or [b]BIG Telco[/b]

      [b]What kind of competition is that.[/b] And, as pointed out, the Telcom Act of 1996 required incumbent phone companies to allow competitors access to the installed copper lines. No such requirement like that exists for the cable companies, nor does one exist for Verizon and its FiOS network.

      To me, this is a fundamental flaw of how the communications industry has gotten its way. "Walled gardens" is what these carriers want. Didn't the 'fool' head of AT&T state something to the effect that it was "HIS" pipes; and if you wanted to use them you will "pay"???

      IMHO, there needs to be a fundamental change in communications regulation in the US. Service (or content) providers and infrastructure (or networks) need to be separated. Then you will have competition. It is just [b]not what the entrenched monopolies want.[/b]

      So, before you continue to call this article BS; Sir, I suggest that you get out of the cesspool, and clean yourself off.

      Finally, the Telcos made a lot of promises in the last part of the 1990's in their pleas to be [b]de-regulated.[/b] I wonder how many of them were actually completed as promised. Probably [b]NONE.[/b]
    • It depends on where you live.

      My choices are BellSouth (now AT&T) DSL or dialup (or, if I was rich, satellite). I don't even have a cable choice.

      And, BTW, in case anybody hasn't noticed, the AT&T break-up has pretty much been undone now.
      Beat a Dead Horse
      • Now without regulation

        The deal which created AT&T was that rates would be regulated in the public interest. That deal was undone by the Bell Breakup, and in the new Bell era there is no longer any regulation on rates.

        It's insane.
    • Consider yourself lucky

      Probably because of inexperience, but the record here is dismal compared to yours. We cah have Verizon, or if we don't like them, well, we can switch to Verzon. Or Verizon.

      Count your blessings and consider the bigger picture. You have a market to choose from; lots of us do not or the market is much more limited.

  • Differences in infrastructure

    Dana, the UK is a LOT smaller than the U.S. How much infrastructure has been installed in the UK versus the US? I live in Dallas, about TEN MILES NORTH OF DOWNTOWN DALLAS -- 2 miles from a MAJOR hospital complex. A little over a year ago I moved ONE MILE north and tried to have my DSL moved. AT&T said they didn't have DSL in that area yet!!! It costs a LOT to install infrastructure. "Small fry" companies just can't afford it.

    It would be interesting to check with some of the major vendors about what portion of their revenues are re-invested in infrastructure development.

    Also, I believe that in the UK you still have a government-controlled-and-funded network, which substantially changes the entire field.

    I'll talk about the ILLS of competition in a separate post.
    • Absolutely!

      Goodness! All of England isn't even as big as Florida!!

      Are you nuts Dana?
    • Monopoly

      This is precisely the nonsense I am talking about.

      AT&T has no market incentive to provide you service, or to extend service to new customers.

      If it allowed competition as envisioned under the 1996 Act, someone else might have made that investment to get you service.

      But AT&T worked with the government to guarantee its monopoly, and now doesn't give you service.

      Don't blame me for that. Blame AT&T. Blame the government. Blame the politics. But to call those who call for competition false when the evidence is in, that's just rhetoric.

      Competition good. Monopoly bad. Simple enough for you?
  • Competition and oligopolies

    Studies have shown that in general for capital-intensive businesses fields tend toward oligopolies (a handful of players control most of the market). They are the only VIABLE alternative to monopolies.

    The truth is that QUALITY suffers when there are too many players. We have seen it in law and we have seen it in broadcasting. Consider TV BEFORE cable. In any market there are a limited number of viewers. Let's use 99k viewers as an example. Prior to cable, in most markets there were 3 network broadcasters and maybe 2 independents. So, the 3 major players each had about 33k viewers at any one time.

    Advertising is sold as "cost per thousand". How many dollars am I going to have to pay to reach 1,000 potential customers? Consider that a broadcaster said, "It will cost you $3,300 for that airtime. You will reach 33k customers. So, your cost per thousand is $100."

    That generated a given amount of revenue. With that revenue broadcasters could produce or pay for QUALITY content such as ABC Movie of the Week. (remember those?)

    Then cable came, and later satellite. The CUSTOMER BASE stayed essentially the same. But the number of CONTENT PROVIDERS (i.e., COMPETITORS) exploded. Instead of 3 major providers it went to THIRTY. And now 50-100. But they are all still dividing the same pie.

    So now the same airtime reaches 33 HUNDRED. Which means THE VENDOR CAN'T CHARGE AS MUCH FOR ITS PRODUCT. But EACH vendor still has a lot of the same EXPENSES. The vendor still needs secretaries, managers, physical facilities, air conditioning, electricity, etc. But instead of THREE vendors paying for those, it is now THIRTY or FIFTY or 100.

    How do vendors deal with that? BY CUTTING QUALITY. In the broadcasting industry it means "stand by and watch". News shows. Awards shows. Sitcoms. Sporting events. "Reality" shows. THAT content does not require paying writers, actors, etc. Set up a camera and transmit what happens.

    The same thing has happened in law. Historically, U.S. lawyers could get in trouble for charging LESS THAN the amount set as the "minimum reasonable fee". Once those were knocked out lawyers started dropping prices to get clients. The problem is that with so much competition, the lower prices can't sustain a business. So, rather than competition IMPROVING quality, EVERY competitor has to REDUCE quality. The idea that people will choose quality over price is generally a myth.

    We have seen it in the plethora of "add-on" telecom vendors. They throw together a bunch of people who got laid off from a major player, and start offering "bundled" "discount" plans. Then they can't deliver.

    Having loads of competing broadband providers would produce the same results. More than 4-5 vendors in such high-investment fields hurts EVERYONE.
    • Oligopolies modern form of Monarchies.

      Oligopolies modern form of Monarchies.
      OR even Cartels.
      Complete with Corporate~Consumer~Feudalism.

      In your Example of TV...
      Broadcast/cable & Sat (even the nascent & developing IPTV) are run buy the major corporate players. And seems somewhat incestuous or inbreed. (what is the other word for Monarchies)

      NBC(/Universal) as an example, is considered the fourth largest and has many properties including,
      NBC News (MSNBC)
      NBC Sports
      Sci Fi Channel
      SciFi Magazine
      USA Network
      And the NBC Television Network, which includes the
      the National and dozens of Local stations, & the other Universal properties.

      Then there are others ABC/Disney etc...

      Or How About AT&T Divested in the early 80's
      (which I might add is when the PC/Communication Industries began to grow/change/evolve)
      Now they are back, buying back their local/regional offspring, Cell & Cable & even offering IPTV.

      It is the way, of this modern world.
      I think it could be better?????
    • Re: Competition and oligopolies

      "The idea that people will choose quality over price is
      generally a myth"

      In the beginning. But once they get sick of the garbage,
      they'll pay more for quality, and do so with a smile on their
      faces. If this weren't true, there would now be a Wal-Mart
      sitting in the middle of Rodeo Drive.

      'Quality is cheaper in the long run'
  • Competition


    Where I live in Massachusetts, I can choose between RCN, Comcast and Verizon (FIOS). All three are available at where at my house.

    You also mentioned the [b]five[/b] major players in postage stamp England. In the U.S. there's AT&T, Verizon, Sprint, Quest, Level 3, Global crossing as Tier 1 providers (that's [b]six[/b], isn't it??) and a gazillion other carriers such as Comcast, RCN, Charter etc. etc.

    In truth, it simply seems to me you're uniformed with regard to the scope of the U.S. telecommunications infrastructure.
  • if there really monopolie

    hit them i the nuts big time .....
    unless there are political reasons .........

    But once again a other proof that market cannot regulate itself one way or the other everything end up toward a monopoly or oligopoly in that case anti trust case must hit hard and fast with maximum vengeance to educate company on the wrong side of thing
    • Actually, there is not

      He continues to call the phone company "the monopoly, yet he does not say that their are many, many phone companies in the US.

      He nevers mention them, just groups them as "the ONE phone monopoly".

      How is it in Canada? is it all one company, or are there many separate ones, all with their own lines, or doe smaller ones lease off of the larger companies?
    • well please dont talk about it

      I dont know for all canada but in quebec province there Bell that own most of the line. there a few smaller company in region. but even if you get plan from other supplier you still have to have the minimal fee from Bell ...

      and then you have cable company that provide in certain area phone signal .... its a bit cheaper...

      But more are less they should kick that industry in the nuts here too big time .... but since here we live in a time that money worth more that principle we are screwed as always and until what we call now democracy (political investment in reality ) we are and stay screw
      • There are also realities.

        One being that if each carrier is to run or maintain their own lines, every pole would have enough lines strung on them to become a hazard or real eyesore.

        Plus, how many times could I tolerate my street and yard dug up as some new company wished to install their phone service?

        I can see limited number of lines and leasing in that respect,
        • This is what Bell regulation has always been about

          It was to prevent this redundancy that the Bell System was formed in 1908 -- monopoly in exchange for regulation.

          And it was to prevent redundancy that the 1996 Act was created -- reduced regulation in exchange for competition.

          What the monopolists and government have done in this decade is change the deal. No competition, and no regulation either.

          That's why your bits cost you so much, and there's no incentive to give you more.
    • There is continuing role for good government

      What really angers me about the last decade is how the government, which is supposed to prevent monopoly, actually worked with incumbents to create unregulated monopolies.

      And now you're seeing the apologists for that system try to protect their advantage.

      Trouble is, the Internet is everyone's. The spectrum is everyone's. To have unregulated monopolies controlling these key economic assets is to allow your future to be strangled.
      • No such thing as "good government"

        Nor can perfection be achieved, but between government and the private sector, I'll put my faith in the private sector every time - and for good historical reasons.

        Government is inherently evil, by which I mean, it's natural tendency is to commit evil. That is why we have checks and balances - a built in admission of the inherent evil nature of government.

        Markets are inherently good, by which I mean, their natural tendency is promote prosperity, freedom, and individuality.

        Yes, a market can do bad things (although it tends to do good), and government can on occasion do good things (although it tends to do bad), but the blind faith people put in something as inherently evil as government never ceases to astound and amaze me.